LNG activity heating up in BC as Petronas seeks export licence

There has been a rebound in the number of applications to drill gas wells in British Columbia. The province’s Oil and Gas Commission had granted authorization to drill 469 new wells by the end of June. This was up 53 per cent over the same period last year, according to the Vancouver Sun. Many of the authorizations have been granted to Shell Canada and Progress Energy, the paper said.

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Big producers like Petronas and Exxon are seeking export permits for Canadian LNG at the same time Asian importers India and China are raising prices, preparing to meet soaring demand for the fuel in the coming decade.

Progress Energy is now owned by Malaysian energy giant Petronas, which has proposed building massive facilities for processing and exporting liquefied natural gas from the BC coast. Through its Canadian unit, Pacific Northwest LNG, Petronas said today that it has applied to the National Energy Board for a permit to export 20 million tonnes of LNG per year from the proposed BC site. The facility, which would be built on the province’s northern coast, would cost an estimated $11 billion to build and would create up to 3,500 jobs during construction. There would be 200–300 permanent jobs at the site when it becomes operational, the company says.

Pacific Northwest LNG applied for a 25-year licence, beginning in 2019. Petronas has not yet made a final decision whether to proceed with the project. An environmental impact assessment must still be done as well.

Exxon Mobil is also seeking a National Energy Board licence to ship up to 30 million tonnes of LNG to Asia, working with its Canadian subsidiary, Imperial Oil. Chevron and Royal Dutch Shell already have permits to export LNG.

The increase in drilling applications in British Columbia is seen as evidence of these companies’ trying to establish the resources for the proposed projects.

In India and China, where much of the Canadian LNG will likely go, prices of natural gas have risen, in the case of India very dramatically. India nearly doubled the price of natural gas last week, The Economic Times reported, while China raised its price by about 15 per cent. The move is seen as preparing the way for increased imports. Prices had been kept artificially low, well below the prices of globally traded LNG, making it unprofitable for importers to bring LNG into those countries.

But demand for LNG in both countries, especially China, is expected to soar in the coming decade. India’s imports are expected to rise from 15 million tonnes in 2012 to 50 million tonnes by 2020. A similar jump is seen for China, which imported 14.7 million tonnes last year and could hit 60 million tonnes by 2020.

India already has plans for building LNG import terminals with capacity of close to 100 million tonnes per year by 2020.

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